Don’t Make Us Choose, Dogeboy

Because one of these platforms stands for free speech while the other just pretends to.

Elon Musk is beefing with Substack. Currently, links to Substack articles shared on Twitter can’t be liked, retweeted, or commented on; it’s effectively a quasi-ban of Substack on Twitter. I think it’s reasonable to assume Substack’s planned “Notes” functionality is playing a large part in this.

Given that, we can certainly debate the legitimacy of Elon’s beef if we must. But I’d caution that there are literally dozens of Twitter-like alternatives to Twitter that haven’t had to deal with this level of handcuffing. There is something different about Substack and I think Musk is obviously seeing the vision. Love Musk or hate him, he’s not an idiot. Before I get to why I think this is happening, let’s get some basic concessions out of the way:

Can Musk do this?

Yes. He bought it. He can do whatever the hell he wants with Twitter.

Is this good policy?

No. And this has consistently been my stance regarding all of these social media ban issues since day one.

Is Twitter a public square?

Only if it wants to be. And it’s becoming increasingly more clear that Twitter wants to be more of a walled-garden ecosystem akin to Apple AAPL 0.00%↑ rather than more open like Android GOOG 0.00%↑.

What is really going on here?

Let’s get the obvious out of the way: Elon Musk doesn’t care as much about censorship or speech freedom as he portrays. Sure, he allowed the Twitter Files to exist - but he also allows permanent bans of well-followed FinTwit handles like Rudy Havenstein seemingly without cause.

Elon Musk wants Twitter to be the “everything platform.” And this course of action against Substack is probably a futile attempt to stop Substack’s cannibalization of Twitter because Substack is positioning itself to be the everything app as well. Twitter tried to do newsletters internally and it flopped.

There are a lot of newsletter services. That isn’t what makes Substack special. There very few newsletter services that I have come across that have the breadth of social functionality that Substack now has within one app. With the implementation of Notes, Substack will be one step closer to being a single location for all social engagement: paid newsletters, Discord-style chat features, and a Twitter-style microblog feed - all in one desktop browser or mobile application with discoverability features that will be similar to hashtags or dollar sign tags. Click on the AAPL symbol in the section above and watch where it takes you…

And they’re probably not going to stop with just “Notes.” They’ll eventually implement an ad-based marketplace similar to what Spotify SPOT 0.00%↑ has so creators can monetize through ads in addition to subscriptions without having to hire an internal salesforce. Like the Subscription model, Substack will keep the money-flow internal and take a nice piece of the pie the same way Apple does through the iOS store. All interests will be aligned.

I have no inside information on this plan and I don’t think everyone sees it yet, but I’m convinced this is what Substack appears to be building. They just started with newsletters and are now building everything else on top.

Monetization Models

We have to also consider the situation Twitter is currently in from a monetization standpoint. Anyone who has built a website before probably understands that domain hosting isn’t free. The problem with getting people to your independently managed domain is it’s often difficult and can be expensive. This is why so many content creators have just opted for social media. Of course, the cost of going that route is the ultimate lack of control.

For many years, the relationship between users and social platforms is the platform has covered all costs of content hosting and consumption in exchange for monetizing the data of all parties involved. Or more simply, users opt into advertising in return for not having to pay for using the platform.

The advertisers are ultimately subsidizing all of it. This is highly problematic when any network or platform gets overly reliant on one client or revenue source. And we’ve seen this displayed perfectly through the mainstream traditional media’s inability to criticize the mRNA jabs from Pfizer PFE 0.00%↑ - a company that has literally paid billions in fines for fraudulent marketing.

But so far, ‘free to use’ has been the most effective way to scale. If you can get everything else right regarding UE and how the platform is marketed, the last key ingredient that makes a network successful or not is the quality of the content - and this is something that is largely out of the platform’s control in the early days. Because the platform isn’t creating, it’s curating user generated content. If high-value content creators bring their material and UE doesn’t suck, you’ve got a shot. And this is why Substack is so dangerous for Elon Musk.

Elon is trying to radically change the cost structure for the Twitter user in real time from a free, ad-based model to a subscription model. It’s a better model for a variety of reasons, in my opinion. But the problem with doing this 17 years into the platform’s existence is you’re two decades into an expectation of free that you’re now trying to completely unwind. And the buttons that have been pushed to drive that initiative have been unpleasant. When you do the things that Twitter is doing right now, you basically make it unusable for creators who don’t pay what is essentially the “blue check vig.” For users who wish to continue not paying, the platform becomes de-facto read-only mode. Sure, you can stil post - but nobody sees it.

The way this ultimately goes is Twitter becomes a lot less like Twitter and a lot more like LinkedIn. Which is fine and Musk will probably turn the platform into a pretty good business. But it will result in Twitter being less important in measuring the pulse of the masses and more of a content marketplace for the more affluent.

Twitter’s Substack Problem

Substack has a lot of the tools needed to be successful and has gone about monetization completely differently. Rather than selling the data of all users from the jump, the platform has gone with a hybrid free/premium model. It remains to be seen how this will ultimately work long term and we could one day find that Substack changes things up years down the line just like Twitter out of necessity.

But what makes this model so much more appealing for me personally is it’s roots are long form. Meaningful over transactional. Now here’s the thing that really matters and I 100% genuinely don’t mean this as a shill of my own thing: when you support Heretic Speculator monetarily, or any other publisher on Substack, you support Substack monetarily. The reason for this is because Substack doesn’t charge me to host these letters. They take a cut when you pay for the letters. This is a dramatic shift from consumers being the product to consumers paying for the product. Twitter wants to be this. Substack already is. That’s why Elon fears this platform.

And this is the ultimate lesson from the last 20 years of social media experimentation. Absolutely nothing is free. If you like this platform and you like where it’s headed, please consider supporting it so it doesn’t start to suck. Because Elon is doing what he is doing for a reason. It’s because he knows the old model is broken. And he also knows this little Substack thing is the one. Let’s keep it going with or without Twitter.

When you support these publications. You support Substack. It’s that simple.